Kinder Morgan Inc., the energy giant proposing to build natural gas pipelines in the Northeast, is facing financial troubles linked to falling energy prices and a steep drop in its stock price, according to a recent article in the New York Times.
"The Houston-based company recently announced a 75 percent cut in its quarterly dividend to 12.5 cents per share to conserve cash for financing portions of its expansion projects," The Times wrote. "In addition to a $3.3 billion pipeline through western Massachusetts and southern New Hampshire sought by a Kinder Morgan subsidiary, it's also proposing a Northeast pipeline network in Connecticut, Massachusetts, New Hampshire, New York and Pennsylvania."
Cutting the dividend allows Kinder Morgan to avoid issuing stock to raise capital or incur debt that could jeopardize its credit rating, the company told The Times. Richard Kinder, executive chairman, said in a conference call that the company's stock price has reached the point "where it is no longer an economic source of expansion capital."
The company's stock price had been cut nearly in half, from a high of $32.68 on Oct. 8 to $15.72 on Dec. 8, when it cut its dividend. "Falling oil prices have weighed on Kinder Morgan and the energy industry. However, investor concern over the company's debt also was a factor," the article states.
Tennessee Gas Pipeline Co., a subsidiary of Kinder Morgan, is seeking to build a $3.3 billion natural gas pipeline through southern New Hampshire and western Massachusetts. Project opponents, including Massachusetts Attorney General Maura Healey, say New England does not need additional gas pipelines to maintain a reliable source of energy for the next 15 years.
To read the New York Times article, click here.